Benefits & Pensions
Strong retirement programs can be a real differentiator for employers
By Derek W. Dobson, CEO and Plan Manager, CAAT Pension Plan
The pandemic has created seismic shifts that are having lasting impacts on Canadian workplaces from coast to coast.
Border restrictions, paused production lines, waves of Baby Boomer retirements, mass migration to home offices and away from urban hubs, and a spree of career changes and labour force exits. The confluence of individual, business and government responses to manage through the health crisis has contributed to the headlining labour shortages we see today.
Nearly one million positions remain unfilled across Canada, more than double the previous year, according to Statistics Canada. Resourcing continues to lag for businesses that rely on foreign skilled and unskilled labour, as borders begin to open to more incoming workers. High resignation rates initially spurred by workers experiencing burnout and career dilemmas – front-line workers, ‘survivors’ of layoffs in March 2020, primary caregivers at home – have hindered business recovery and restaffing efforts.
While Canada has not seen the Great Resignation reach the same level as in the U.S., where more than 4.3 million workers resigned in November 2021 alone, a record number of Canadian workers are leaving long-held jobs or thinking about it.
More than two years of uncertainty and volatility juggling work, home, health and finances is motivating many to reflect on their job satisfaction and reprioritize commitments and loyalty to their company.
In a 2022 Microsoft Work Index study, 52 per cent of Generation Z and Millennials, in Canada and globally, reported that they are thinking about leaving or switching jobs in the next twelve months. Moving up the age brackets, more than one in five workers are approaching age 65, an all-time high in the history of Canadian censuses. The Boomer cohort’s exit from the labour force was cited in a statement by Statistics Canada released in April 2022 as “one of the factors behind the labour shortages facing some industries across the country.”
Just as organizations begin to grow and adjust to new working arrangements, the Great Contemplation, as it has been called in the north, has the potential to trigger a significant rush of resignations, having major impacts on growth and sustainability. Workers are rethinking their career, workplace conditions, mental health, life goals and financial priorities, while employers are wrestling within to mitigate attrition and maintain the workforce needed to succeed.
This environment is anything but usual. Workers can now more easily entertain offers from across the country and other sectors, including the ever-attractive gig economy, and enjoy having the negotiating power in the hiring or stay process. Increased talent mobility makes it more important than ever for leaders to invest in retaining and upskilling the existing workforce.
Astute employers are already deploying initiatives to enhance all facets of the employee experience, in an effort to satisfy employees enough to stay and to lure top talent from competitors.
With a record number of job vacancies and the unemployment rate at its lowest, employee retention remains a challenge for Canadian businesses.
The talent gap is widening and traditional retention strategies are an insufficient stopgap. Marginal pay increases won’t do the trick over time. To weather the current labour shortage and compete in the new world of work, employers are pursuing a holistic and long-term approach to employee wellbeing.
Retirement programs inspire loyalty, retention
The pandemic has shown how quickly and severely one’s state of health can be undermined, and how physical, mental and financial health are intricately connected. Workers are now wielding their upper hand to demand support for their mental, physical, financial and professional goals, challenging employers to go beyond the paycheck and enrich the total employee experience.
Hiring managers today could quickly scan the job postings online and see that comprehensive health benefits, family assistance programs, and flexible work arrangements are becoming table stakes. On the other hand, rewarding retirement programs are an emerging differentiator separating the employers of choice from the rest. Retirement programs are not new, but they are more valuable to employees who are more focused than ever before on financial wellness and organizations that share the same values.
Helping employees save for a better future is a key cultural feature and competitive advantage, with symbolic and material value to employees and employers alike.
A joint investment in the retirement security of workers strengthens the bond between employers and employees.
Almost 80 per cent of Canadians say they would prefer a pension plan over a pay increase, and 60 per cent would be unlikely to work for a company that doesn’t offer a retirement plan. A plan that provides lifetime retirement income aligns with what employees want – a holistic approach to wellbeing and total rewards – and the outlook that they hold.
There is a broad consensus among the majority of workers across all income levels and employers that organizations have a responsibility to offer a pension plan so that employees can have adequate retirement income. In fact, 83 per cent of Canadian employers who offer retirement benefits say it is extremely or very important to their recruitment, retention and stress-reduction efforts.
Given the costly and time-consuming competition in the labour market, employers can achieve a higher return on investment by inspiring loyalty through a better retirement plan. This allows organizations to nurture the experience and expertise within the company, improve employee productivity and engagement, and strategically position itself as a prime destination for new talent seeking a better workplace and cultural fit.
A recent international survey found that Canadian employers anticipate robust demand in the labour market coming out of the second quarter of 2022. Primary production, manufacturing, wholesale and retail trade, and financial and insurance are among the sectors driving most of the demand.
Many Canadian employers are already initiating, improving, or leveraging existing retirement programs to demonstrate a people-first commitment to financial wellness, while improving productivity and engagement levels. Those who do not pivot quickly to the modern needs of their staff could stand to lose their top performers, which can further accelerate other departures. A good retirement program, such as a pension plan, will improve the “intend to stay” engagement scores and reduce costly turnover, hiring and retraining costs.
In the increasingly competitive war for talent, employees hold the power and their demands are clear: Canadian workers want more holistic wellness programs to support their longevity and financial security.
Implementing programs that remove the burden of financial stress, and the associated physical and mental toll that it can take on workers and their families, will help retain the workforce talent needed to survive and thrive in the post-pandemic business world.
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